James Hardie company

Faculty of Higher Education Group Assignment Cover Sheet This cover sheet must be submitted with your assignment Unit Details Unit Name ECONOMICS FOR BUSINESS Code HI5003 Year 2023 Trimester number TRIMESTER 2, MID TERM Assessment Details Assessment Name GROUP ASSIGNMENT Due Date dd/mm/yyyy 13/10/2023, Week 13 Group Number Group Student Details Student ID First Name Family Name Work Contribution Group Submission Declaration Integrity Declaration We have read and understand academic integrity policies and practices and our assessment does not violate these. Student ID First Name Family Name Submission Date 1

Table of Contents Executive Summary ........................................................................................................... 3 Introduction ........................................................................................................................ 3 Company Background ....................................................................................................... 4 Industry/Sector Background .............................................................................................. 4 The Market Structure of the Industry/Sector ..................................................................... 5 Microeconomic and Macroeconomic Factors Influencing Demand .................................. 6 Microeconomic and Macroeconomic Factors Influencing Supply ..................................... 7 Elasticity ............................................................................................................................. 9 Recent Macroeconomic Event ........................................................................................... 9 Company Strategy for the Next 5 Years .......................................................................... 10 Recommendations ........................................................................................................... 11 Conclusion ....................................................................................................................... 12 References ....................................................................................................................... 13 2

James Hardie has consistently made a point of emphasizing sustainability and environmental responsibility. The company has invested in cutting-edge manufacturing facilities that adhere to strict environmental rules in order to reduce its carbon impact. With this dedication to sustainability, James Hardie becomes the industry leader in green construction materials and keeps up with current trends throughout the world. The company's financial performance over the preceding 10 years has also been impressive, with constant rise in revenue and profitability. It has succeeded and maintained its resiliency because to its strategic initiatives, such entering overseas markets. These activities have improved its reputation as a leading Australian company in the building materials sector. Industry/Sector Background The Australian building materials business, which consistently experiences growth and makes a sizable contribution to employment, is a dynamic and important sector of the country's economy. The industry's growth over the previous five years has been fueled by several important reasons. Urbanization and population increase are two key trends influencing the construction materials industry. Australia's population has been continually growing, which in turn drives up demand for infrastructure and housing. The building sector sees increased activity as more people relocate to cities. This rapid urbanization has led to numerous construction, remodeling, and infrastructure projects, which has increased demand for building supplies ( Comino, 2014, p3(2)). The business is characterized by fierce competition between local and foreign competitors, even though a few eminent firms, including James Hardie Industries, have amassed sizable market shares. Their success may be ascribed to several things, including the caliber of their products, their innovations, and their established reputations. The price and market dynamics are mostly under the control of a small number of enterprises in this sector's market structure, which is effectively an oligopoly. Sustainable and environmentally friendly construction methods are becoming increasingly important, as shown in the construction materials industry. In response to customer demand for ecologically friendly alternatives, this has been done. In line with international sustainability trends, manufacturers have embraced more sustainable processes and created goods with less environmental impact. The trajectory of the industry has also been greatly influenced by government infrastructure spending and policy. These expenditures, which aim to close infrastructural gaps and foster economic growth, have an immediate effect on the demand for building supplies. Analyzing James Hardie Industries' position and prospects in the Australian building materials business requires a thorough understanding of the sector's complexities and important players within it. 4

The Market Structure of the Industry/Sector The construction materials market in Australia is still developing due to shifting customer tastes and technical improvements. As was already said, this industry's market structure is best characterized as an oligopoly, in which a select few significant firms, like James Hardie Industries, command a sizable amount of market power ( HALFF & Gregory, p3(4)). Firms may affect prices, concurrence, and the trajectory of the industry within this market system. Due to this circumstance, James Hardie Industries can compete fiercely and, occasionally, constructively with other major industry players. A pattern of continual creativity and product improvement has resulted from this cooperative competition. Additionally, the oligopolistic market has forced businesses like James Hardie to concentrate on strategic distinctiveness. These businesses generate distinctive goods via research and development that serve a range of market segments, from home building to business endeavors. As a consequence of putting a strong emphasis on the quality of its goods, innovation, and customer happiness, James Hardie Industries continues to be able to hold onto and grow its market share. Regulatory monitoring and the possibility of antitrust breaches as a result of the strong market power possessed by a small number of companies are difficulties in this market structure. However, it also enables businesses to realize economies of scale and make significant R&D investments, ultimately providing consumers with high-quality products. Microeconomic and Macroeconomic Factors Influencing Demand Numerous microeconomic and macroeconomic factors are closely correlated with the demand for James Hardie Industries' goods. Consumer preferences for long-lasting, low-maintenance construction materials have greatly influenced the company's success at the microeconomic level. As a result, James Hardie's fiber cement materials, recognized for their durability and resilience, are increasingly valued by consumers as being low maintenance. The market for James Hardie's products has also been positively impacted by the movement toward sustainability in building materials. Environmentally friendly materials are in demand as customers and builders become increasingly concerned about the environment. Recognizing this trend in customer preferences, James Hardie Industries has invested significantly in creating environmentally friendly materials like fiber cement siding ( Latimer, 2013, p2(3)). The demand for James Hardie's goods is influenced by several macroeconomic variables. A key factor is the state of the housing market. When the real estate sector is robust, which is shown by an increase in home development and sales, there is an increase in demand for roofing materials, notably James Hardie's goods. Contrarily, during economic downturns, when consumer confidence is low and accessibility to capital for building endeavors is constrained, consumer appetite for these materials tends to fall. 5

From a macroeconomic standpoint, the state of the economy as a whole has a big influence on supply. Reduced construction activity can result from economic downturns or recessions, which therefore has an impact on the demand for building supplies. James Hardie Industries has devised a flexible strategy for production that enables scalability in response to variations in demand to adjust to such macroeconomic volatility. Governmental restrictions are a further macroeconomic issue that affects supply. The construction materials industry is placing more and more emphasis on sustainable development and safety regulations. The creation of new, environmentally friendly product lines and expensive alterations to production procedures may be necessary to comply with these rules. Because of James Hardie's dedication to sustainability, the company is well-positioned to comply with these rules while simultaneously promoting innovation in its line of environmentally friendly products. Additionally, logistics and transportation are crucial to the provision of building supplies. To get items to customers quickly, distribution networks must be effective. The effectiveness of transportation is impacted by macro-level variables including fuel prices and infrastructure growth. Even in the face of macroeconomic difficulties, James Hardie Industries maintains a strong logistics network to guarantee a seamless and timely supply chain ( Moerman, et al, 2014, p4(1)). Elasticity Knowledge of how responsive demand is to price changes requires a knowledge of the idea of elasticity. Demand is typically described as being inelastic in the construction materials business, notably for goods provided by James Hardie Industries. This implies that price changes have little effect on the amount sought. This inelastic demand is a result of the necessity of building materials. These goods, whether they be siding, flooring, or construction boards, are essential to construction and remodeling operations. These items are regarded as crucial inputs for infrastructure and residential development since consumers and building professionals frequently have few other options. Additionally, the price of building supplies, including James Hardie's selections, makes up a relatively tiny fraction of the total cost of construction. Therefore, even substantial price increases are difficult to appreciably reduce demand. The corporation benefits from this price inelasticity since it enables steady pricing and margins of profit. But it's crucial to understand that despite the industry's inelastic product demand, James Hardie Industries was able to stand out from the competition and establish some pricing elasticity. Because of its emphasis on product quality, creativity, and sustainability, the firm can charge higher costs than some of its rivals. Customers are frequently prepared to pay extra for James Hardie's products' dependability, ease of upkeep, and environmental advantages. 7

Recent Macroeconomic Event The worldwide economic depression brought on by the COVID-19 pandemic was a substantial macroeconomic event that had a substantial influence on James Hardie Industries as well as the Australian building materials sector. The pandemic in early 2020 resulted in restrictions and shutdowns that hindered building work, reduced consumer confidence, and increased market instability ( O’Connell, et al, 2016, p2(2)). The building industry was forced to deal with a variety of difficulties as a result of these interruptions. Numerous construction projects were postponed or abandoned, which temporarily reduced the need for building supplies, including James Hardie's goods. Production problems included disruptions in the supply chain and a smaller staff because of health and safety regulations. James Hardie Industries has shown flexibility and resiliency in the face of an extraordinary disaster. The business swiftly changed its operations to comply with new health and safety regulations and turned its emphasis to crucial projects like the construction of healthcare facilities and infrastructure. To accommodate distant work and communication, the firm has strengthened its digital infrastructure. Despite the early losses, thanks to government stimulus plans and cheap lending rates, the building industry has recovered. James Hardie Industries benefited from an increase in demand for housing, remodeling, and infrastructure projects. The emphasis on environmentalism and healthy building materials—areas where the firm has a competitive advantage—and other industry developments were pushed by the epidemic. Company Strategy for the Next 5 Years The multidimensional nature of James Hardie Industries' strategy for the following five years reflects the firm's dedication to innovation, sustainability, and tactical expansion. First and foremost, the business will keep emphasizing sustainability and environmentally friendly building materials. James Hardie wants to lead the industry in creating goods with a lower environmental effect as worries about the environment throughout the world increase. This will involve increased waste reduction efforts, the development of sustainable lines of goods, and energy efficiency programs ( Ramsay, 2015, p4(2)). Second, the business wants to increase its exposure in foreign markets. James Hardie, which already has a significant global presence, wants to improve its standing in important areas, especially North America. To specifically address the demands of various markets, this expansion will involve specialized product offers. The company's strategy continues to place a premium on innovation. James Hardie Industries will make R&D investments to investigate cutting-edge building materials and technologies. Whether in the context of smart houses, energy-efficient development, or 8

The market structure of the sector is best characterized as an oligopoly, according to the research, with a few key firms controlling a sizable portion of the market. James Hardie is a leader in the business because of its capacity to successfully compete within this framework and adapt to shifting microeconomic and macroeconomic conditions. The COVID-19 pandemic, a recent macroeconomic event, highlighted the company's flexibility and strategic savvy, highlighting its capacity for resilience even in the face of unheard-of difficulties. 10

References Barber, F, 2013, 'Directors’ Duties' Imposed Below Board Level, Victoria University of Wellington Legal Research Paper, Student/Alumni Paper , (28) https://researcharchive.vuw.ac.nz/bitstream/handle/10063/3171/thesis.pdf?sequence=2 Comino, V, 2014, James Hardie and the problems of the Australian civil penalties regime, University of New South Wales Law Journal, The , 37 (1), pp.195-230 https://www.unswlawjournal.unsw.edu.au/wp-content/uploads/2017/09/37-1-9.pdf HALFF, G and Gregory, A, The Asian Century: But what do comparative histories tell us about practice?,(2013), In International History of Public Relations Conference, Bournemouth University, 24-25 June 2016 https://core.ac.uk/download/pdf/13245821.pdf Latimer, P, 2013, How to ensure disclosure of information in securities markets Post- GFC, Common Law World Review , 42 (2), pp.111-136 https://www.zbw.eu/econis- archiv/bitstream/11159/262700/1/EBP074685511_0.pdf Lo, S H, 2014, A Parent Company's Tort Liability to Employees of a Subsidiary, J. Int'l & Comp. L. , 1 , p.117 https://www.jicl.org.uk/storage/journals/November2020/AFHPqchTUosycNY63flp.pdf Moerman, L and van der Laan, S, 2013, Accountability and asbestos: why the James Hardie compo model won't work for Telstra https://ro.uow.edu.au/cgi/viewcontent.cgi? article=1444&context=buspapers Moerman, L, Van deR Laan, S and Campbell, D, 2014, A tale of two asbestos giants: Corporate reports as (auto) biography, Business History , 56 (6), pp.975-995 https://citeseerx.ist.psu.edu/document? repid=rep1&type=pdf&doi=33fe621acf569fd9fabbd14ce1071aaf353d3b29 O’Connell, B, De Lange, P, Stoner, G and Sangster, A, 2016, Strategic manoeuvres and impression management: communication approaches in the case of a crisis event, Business History , 58 (6), pp.903-924 https://eprints.gla.ac.uk/114520/7/114520.pdf Ramsay, I, 2015, Enforcement of continuous disclosure laws by the Australian Securities and Investments Commission, Company and Securities Law Journal , 33 (3), pp.196-204 https://www.zbw.eu/econis- archiv/bitstream/11159/252322/1/EBP074602136_0.pdf Solaiman, S M, 2013, The landmark James Hardie case in Australia: A wakeup call for non-executive directors https://ro.uow.edu.au/cgi/viewcontent.cgi? article=2291&context=lhapapers 11